Advice groups agree to agree as reform law looms

July 30, 2017

Michael Dowling: IFA chair

A trio of New Zealand’s financial adviser organisations are stepping into the unknown after reaching approval last week to form a new pan-industry body.

Michael Dowling, Institute of Financial Advisers (IFA) chair, said the three groups involved in the reboot “don’t know yet” how many of their respective members would transition to the proposed Financial Advice New Zealand (FA-NZ) body.

“That will be our new problem,” Dowling said last week after IFA, Professional Advisers Association (PAA), and NZ Financial Advisers Association (NZFAA) members unanimously approved to form FA-NZ at separate annual general meetings.

Following the votes, the three adviser groups have been given the OK to formally establish FA-NZ using collective member funds to finance the venture.

Dowling said the groups would consider several funding avenues including a capital-raising, debt, and/or via member levies.

Details of the new FA-NZ establishment board – to comprise five members – will be revealed at the joint adviser body conference in Auckland this week.

In a release last week, the FA-NZ working group said the establishment board would be responsible for the final phase of development for the cross-industry organisation.

“This will include developing the operational infrastructure and building the framework for the new body to deliver on it’s core objectives in the three areas: advocacy, standards and promotion,” the statement says.

Dowling said once fully-established the FA-NZ would have a seven-member board comprised of three practitioner members and four independent directors.

He said the new body should be formally launched within nine months to a year.

In the interim the existing three adviser groups would continue to function in “business as usual” modes, Dowling said.

“But we can still co-operate on various things,” he said.

The three component organisations would likely wind up once the FA-NZ structure was in place.

Bruce Cortesi, PAA president, said the new industry body would be more than an amalgam of the three underlying adviser groups.

“We have an opportunity to create a new culture that is looking to the future,” Cortesi said.

The birth of FA-NZ should also coincide with the revamped financial advisory regulatory regime, which is due to start the legislative process in a week or so.

James Hartley, Ministry of Business, Innovation and Employment (MBIE), head of financial markets policy, said the Financial Services Legislation Bill (FSL) was on track to enter Parliament within “a couple of weeks”.

The FSL will repeal the 2008 Financial Advisers Act, shifting the legal basis for regulation of the industry to the Financial Markets Conduct Act.